Australia’s War on Business Method Patents: Advice for Concerned Patentees

Published on 24 May, 2016

As recently noted, the High Court has declined to change the direction of the debate over patentability of computer implemented technologies in Australia. Accordingly, for the foreseeable future, the Australian case law situation will remain focussed upon the Full Federal Court’s decision in RPL.

This will ensure the perpetuation of the recently introduced arbitrariness in assessing the patentability of truly unique and valuable computer-implemented advancements which, up until the changes, were clearly patentable. It also creates serious challenges for businesses whose patenting prospects are now, more than ever, at the mercy of Australian Patent Examiners (a topic on which we shall provide additional commentary in due course). There are also many businesses with issued Australian patents who wonder what the RPL decision means for them.

The general situation is as follows: a business has successfully obtained an Australian patent for “business-related” technologies based on the examination standards of the day, and progressed a commercial strategy which makes integral use of those patent rights. This includes business strategies such as licensing, keeping competitors at bay, or as part of building value within a business to provide an exit strategy. Now, following the Patent Office’s successful pressuring of the Federal Court to modify the test for patentability, doubt might be cast over the validity of those patent rights.

So, what is an established patent-holding business to do?

Well, the sky hasn’t exactly fallen in just yet. The validity of an issued patent can only be tested at the Federal Court (at least in the first instance), and the facts of any given case can influence the Court to evolve the way in which precedents are applied. Strictly speaking, the full bench of the Federal Court is bound only by High Court precedent (and can overrule their [its?] own decisions), and the leading relevant High Court precedent requires only “an artificially created state of affairs of utility in the fields of economics endeavour”. Many commentators believe this test encompasses a wide variety of computer-implemented business methods and that the newly proposed test is too susceptible to an incorrect application that is not consistent with the earlier test.

But why might the Federal Court be swayed to change their tack? Well, the very nature of practical situation underlying the litigation of an issued patent could provide the needed trigger for such a change. In both the Research Affiliates and RPL cases, the court was faced with a theoretical question of whether a patent should be grated over certain technologies. This was primarily a legal debate, with only very secondary regard being had to any commercial or economic factors. However, in the litigation over an issued patent, there are inevitably going to be more practical economic considerations in play, such as “should this third party be allowed undermine this business by copying patented technology”, which have the potential to assist the Court in understanding the real-world importance of patent protection in a business context. This would provide added physicality and context to the High Court’s “artificially created state of affairs of utility in the fields of economics endeavour”, and perhaps lead to a more business and innovation supportive interpretation on the longstanding High Court case law.

Of course, here we are dealing only in creative hypothetical situations. But the message is clear: there remain avenues by which the validity of issued patents can be strongly argued to ensure the new test is properly applied in light of the pre-eminent guidance provided by the HCA about the real nature of what is protectable. In practice, the potential validity of a patent might shift to either side of the line many times over the lifetime of that patent; although the actual validity will only ever be ultimately crystallised once decided by the Courts on a case-by-case basis.

Industries

At Shelston IP, we recognise the imperative to develop and maintain a high level of knowledge about our clients’ businesses, and the industries in which they operate. We have accumulated deep experience in all of the ‘IP-reliant’ sectors, meaning those that are technical, knowledge-intensive and research-driven.
Many of our practitioners held positions of responsibility within corporate Australia and public institutions prior to qualifying as attorneys. Today, we strive hard to stay connected and informed through active involvement in a large number of industry associations and professional bodies. This includes participating in task forces, committees and specialist work groups which have been assembled to aid the progression of our sectors.